GGP's Bankruptcy

Thu, 2009-04-16 13:20

Updated at 9:51

Updated at 10:18

Updated at 11:11

We all knew it was likely. Now it's happened. The biggest real estate bankruptcy is now official. Blaming the broken financial markets, General Growth made the news official with a release that hit the company's Web site early this morning.

You can read its SEC filing here. And you can view its bankruptcy filing below.

What can we expect now? This is precisely the question we tackled in our February cover story which surveyed bankruptcy experts and looked at how a REIT bankruptcy might unfold.

Bankruptcy experts, however, say that many of the worries may be unfounded. The sector may not have been tested by a big bankruptcy yet, but enough is known about how the companies are structured and how a bankruptcy proceeds that experts think the industry should emerge fine, even from a series of bankruptcies. Further, there is reason to believe that because REITs control a tangible base of assets through large portfolios of real estate, these firms may be more likely to survive bankruptcies than other companies that's value is harder to pin down or could be subject to liquidation.

We'll have more--much more--on this story as new details emerge. For now, here are links to some of the key write-ups so far.

Update 3: One thing to keep an eye on today is how other regional mall REIT stocks fare given this news. For example, I just spotted this post which takes GGP's bankruptcy as a jumping off point for an argument that investors should short REIT shares. As I write this, here is how the other regional mall REITs are looking. Currently, the other major regional mall REITs are down between 6 percent and 1 percent--that's not too sharp a move. The Dow and S&P 500 are basically flat on the day.